SA fares well in emerging markets study

14 December 2010

A Brazilian industry survey into doing business in 14 mostly emerging markets shows that South Africa competes well with its peers, particularly when it comes to affordability and availability of capital, financial market sophistication, business tax rates and infrastructure.

Released last week by Brazil’s National Confederation of Industry, “Competitividade Brasil 2010: Comparaçao com Paises Selecionados“, (Competition Brazil: A comparison with selected countries) compares 14 countries on a range of measures.

These include the availability and cost of labour and finance, macro and micro economic climate, education, and innovation and technology.

The countries surveyed are Australia, Canada, Russia, Mexico, China, Poland, Spain, India, Korea, Brazil, South Africa, Colombia, Chile and Argentina.

Sophisticated financial market

The report makes use of figures from existing global studies such as the World Bank’s Doing Business Report, the Institute for Management Development’s Competitiveness Yearbook and the World Economic Forum’s (WEF) Competitiveness Report.

Out of the 14 countries, the survey found, South Africa has the second most sophisticated financial market, just behind Canada and ahead of Australia and Brazil.

South Africa has the second-lowest effective business tax rate (business taxes as a percentage of company profits), behind Chile, with businesses in Brazil, Colombia and Argentina being taxed the heaviest.

South Africa is ranked fourth out of 14 countries for ease of accessing capital, making it easier to access a loan in SA than in India, Colombia, Brazil, China, Korea and Russia, but more difficult than Australia and Chile.

Lower cost of capital

When it comes to cost of capital, South Africa is ranked fourth out of 13 countries, with financial institutions that are more affordable for local inhabitants than those in Russia, China and Korea, but more expensive than those of Canada, India, Chile and Australia.

Ranked sixth out of the 14 countries, South Africa’s transport infrastructure is better than that of China, India, Mexico, Brazil, Poland but behind that of Korea and Chile.

South Africa places seventh out of the 14 countries for foreign direct investment (FDI) as a percentage of gross domestic product (GDP) in 2008. South Africa’s FDI of over three percent of GDP puts it ahead of Poland, Canada and Brazil, but behind Chile (10 percent) and Australia and Colombia and Russia (over four percent).

Cost and availability of labour

However, South Africa fares badly when it comes to the cost and availability of labour. South Africa is ranked last among 11 of the countries when it comes to the cost and availability of its labour.

For availability of manual labour, South Africa is ranked last out of the 14 countries and is also the only country of the 14 whose labour force shrunk in 2008 (by over three percent, compared to India, where the workforce grew by almost three percent).

But when it comes to cost of manual labour, South Africa is ranked fifth out of 11 countries, with its labour priced at about the same level as South Korea, more affordable than Poland, Russia and Mexico, but more expensive than Brazil, India and China.

The report also reveals that South African factory workers (ranked seven out of 11 countries) are better paid than those of Brazil, China, India, Poland and Mexico – but less than those of Korea.

When it comes to productivity, South African workers are ranked eighth out of 13 countries – more productive than workers in Russia, Colombia, Brazil, China and India, but less productive than workers in Korea, Chile and Mexico.

Higher education: more graduates needed

South Africa ranks poorly when it comes to education; only India fares worse when it comes to the percentage of matriculants moving onto higher education in 2007.

In Brazil, 30 percent of matriculants graduated to tertiary institutions in 2007, and the figure was over 50 percent in Chile and over 90 percent in Korea – compared to just 15 percent in South Africa.

This is despite the report ranking South Africa fourth for the percentage of GDP it spends on education (in 2007 this was over four percent), behind Canada, Mexico and Australia.

The report ranks South Africa 11th out of 14 countries when it comes to the country’s use of technology and innovation – putting the African country behind Korea as well as the BRIC (Brazil, Russia, India and China) countries, but ahead of Colombia, Mexico and Argentina.

According to the report, South Africa has the seventh most mobile phones per 100 inhabitants, ahead of Chile, Brazil, Canada, China and India, but behind Argentina, Russia and Poland.

Source: BuaNews